HSBC profits almost double in the first three months of the year

HSBC branch in Manhattan, New York City: profits have nearly doubled for the first quarter of 2013. Photograph: Mike Segar/Reuters

Profits at HSBC nearly doubled in the first three months of the year as bad debts fell and chief executive Stuart Gulliver took the axe to costs and jobs.

The workforce has fallen from 300,000 to 260,000 since his promotion to run the bank at the start of 2011, Gulliver said, and he "could not give any assurances" that more job reductions would not follow.

The scale of the job reductions at HSBC emerged as the UK's biggest bank reported a pre-tax profit of $8.4bn (£5.4bn) from $4.3bn a year earlier. The 95% increase included gains on disposals of $1.1bn, reclassification of a business as well as a negative impact on the cost of buying back its own debt.

Gulliver is to give a strategic update next week that may give more clues on further job cuts. He has previously said 30,000 jobs would go by the end of his three-year programme. He admitted he was ahead of this target with 26,000 having been cut through cost reduction measures and 14,000 through businesses being sold off. He has conducted 52 disposals since he was promoted from running the investment bank, describing his mission as transforming the "world's local bank" into one with "courageous integrity".

Last year, the bank entered into a deferred prosecution agreement with the US department of justice and paid a record £1.2bn fine for money-laundering offences. Gulliver said the terms had been agreed but that an independent monitor to oversee its business had yet to be named.

Sandy Chen, banks analyst at Cenkos, said "all the big levers moved in the right direction in the first quarter" and the bank's shares rose 3% to close at 735p. Ian Gordon, analyst at Investec, suggested there were a "compelling case" to return cash to shareholders - at a time when many other banks are being required to hold more capital.

Gulliver, who is awaiting approval from the Chinese authorities to list its shares in the country, said the bank was "moving into calmer waters but we think there are challenges ahead".

He cited the eurozone – where the bank expects the 17-nation single currency bloc to contract during 2013 – but pointed to growth in China and the US.

"Although broad macroeconomic challenges persist, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year. We forecast that the US will continue to outperform its peers, though the pace of growth will be slow compared with past experience. We expect that the eurozone will contract, that emerging markets will grow at around 5%, and that global growth will be around 2% in 2013," the bank said.

The amount set aside to cover bad loans fell 51% to $1.2bn, largely as a result of fewer loan provisions in the US, where the bank has been pulling out of troublesome businesses.

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HSBC profits almost double in the first three months of the year

This article was published on
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at 13.59 EDT on Tuesday 7 May 2013.
It was last modified at 15.51 EDT on Wednesday 21 May 2014.
It was first published at 06.39 EDT on Tuesday 7 May 2013.